Economic

IMF: Stock markets face the risk of a new collapse

The International Monetary Fund warned, on Thursday, of a new collapse in stock markets if the Corona pandemic continues to spread. 

In a report, the fund pointed to a “separation between financial markets and economic expectations, which raises the risk of a further adjustment in the prices of high-risk assets.”

The IMF considered valuations in many stock and corporate bond markets “overrated”.

The report comes one day after a worse adjustment to the Fund’s expectations for a global recession this year, as part of a report issued on Wednesday on the outlook for the global economy.

The Fund said, today, “There is a fear that the crisis will prolong and deepen more than expected, and economic crises occur due to the high levels of unemployment and the prospects of bankruptcy, which are difficult to treat.”

IMF: Stock markets face the risk of a new collapse

He added: “A sharp correction in asset prices could lead to a massive flight of capital from investment funds, as happened early in the year, which could lead to the sale of assets at less than their real prices.”

The stock markets collapsed in what was known as the “Black Monday” on March 23, but they resumed the rise with the infusion of billions of dollars from governments and central banks to revive the economy, and this was helped by easing the closure measures.

Since the beginning of the Corona Covid-19 pandemic, all countries of the world have taken many measures to reduce the spread of the virus, including suspending flights, closing schools and universities, mosques and churches, canceling celebrations and gatherings, and imposing a partial and total curfew.

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